EU mulls blacklisting its own Member States

The European Union is weighing screening EU Member States themselves for possible inclusion on the EU blacklist of jurisdictions that use harmful or unfair tax practices.

In December 2017 the EU drew up a blacklist of jurisdictions whose tax rules and practices are deemed not in line with its standards. The list had initially included 17 countries and recently shrunk to six.

Member States were excluded from consideration when the current blacklist was originally prepared, because its purpose was to give EU Member States a unified standard for dealings with third countries.

However, the decision attracted heavy criticism from some of these third countries as a double standard, as some Member States also use so-called ‘preferential’ tax practices designed to attract corporate profits away from other jurisdictions.

Lawmakers and campaigners questioned whether countries like Luxembourg, Malta, Ireland or the Netherlands should be considered tax havens due to their tax rules.

The new Austrian presidency of the European Union is now reviewing the mandate of the group that conducted the screenings and regularly updates the list – the so-called Code of Conduct Group on Business Taxation.

“The fact of screening the EU member states with the same criteria is under discussion in the context of the revision of the mandate of the code of conduct group,” the head of the body Fabrizia Lapecorella told the European Parliament’s special committee on tax evasion and tax avoidance, Reuters reports.

The blacklist currently only contains six countries, but could be extended at the end of this year if certain offshore jurisdictions fail to satisfy the CCG that they have ended their ‘preferential treatment’ for non-resident companies.